Silver extended its rebound during Friday's Asian trading session, with spot prices once again approaching the $67 mark and marking a second consecutive day of gains. The recent pullback in oil prices has eased concerns that energy costs could further fuel inflation, prompting a retreat in US Treasury yields and offering temporary support to the non-yielding precious metal.

The decline in crude prices stems partly from Saudi Arabia's gradual restoration of pipeline transport capacity. Markets had remained highly vigilant over global supply risks and the potential for further energy price increases following damage to the kingdom's east-west pipeline, but as Saudi authorities made progress in resuming some capacity, supply fears have moderated and international oil prices have fallen for several sessions.

Cooler energy prices not only directly alleviate inflationary pressures but also reduce expectations that major central banks will need to tighten policy further, thereby improving the interest-rate environment for precious metals. Shifts in the US bond market have reinforced this dynamic, with the 10-year Treasury yield retreating to around 4.93% after briefly surpassing 5% earlier in the week.

Lower yields translate into reduced opportunity costs for holding non-yielding assets such as silver, drawing fresh buying interest. Both gold and silver have staged notable rebounds recently as markets reassess the impact of Federal Reserve rate hikes on real yields and economic growth.

That said, silver's advance does not signal the dissipation of hawkish pressures from the Fed. The central bank raised its policy rate by 25 basis points to a range of 3.75%-4.00% this week and signaled that further hikes remain possible later this year. Fed Chair Warsh emphasized that US inflation remains elevated and that recent summer data have not shown meaningful improvement in underlying price trends.

The hawkish posture keeps investors focused on the future path of rate increases. According to CME FedWatch data, markets now assign roughly a 53.1% probability to another Fed hike in October, up from 44% the previous day. This implies that while lower oil prices and falling yields provide near-term support for silver, rate markets have not fully pivoted toward easing conditions.

Should upcoming US inflation data remain hot and push Treasury yields back toward 5%, silver could once again face downward pressure. Notably, silver carries a more pronounced industrial character than gold, meaning its price is influenced not only by the dollar, real yields, and monetary policy but also by global growth expectations.

With major central banks still maintaining restrictive stances, an extended period of high interest rates could weigh on industrial demand and limit silver's medium-term upside. However, recent price action suggests silver has grown more resilient to hawkish Fed signals. After the Fed's September 16 rate hike, silver dipped to around $61.90 before quickly rebounding toward $66, indicating solid buying support at lower levels.

As markets digest the impact of the rate increase, attention has shifted toward the supportive factors of falling oil prices, declining yields, and dollar adjustments. Silver's trajectory now hinges on a tug-of-war between two opposing forces: on one hand, lower oil prices ease inflation concerns and push Treasury yields down, directly supporting the metal; on the other, the Fed may still raise rates further, and any renewed strength in the dollar and real yields could cap the rebound.

From a sentiment standpoint, silver has bounced significantly off its weekly lows, and the rapid short-term gains raise the risk of profit-taking. If oil continues to slide and US yields stay below 5%, silver may test higher resistance levels; conversely, a swift uptick in yields could lead to renewed tests of support near recent lows.

On the daily chart, silver has rallied sharply from around $61.90, reclaiming the $65 level and extending toward $67. The short-term price structure has clearly improved, with buyers regaining the upper hand. The $67 mark now serves as critical near-term resistance; a solid breakout could open the door to $68.00 and then $70.00. Technical data indicate that with silver clearing $66.56, further upside potential may be unlocked.

To the downside, initial support sits near $65.50, close to the recent breakout zone, followed by the $62.80-$63.00 region and then this week's low around $61.90. Should silver break back below $62.80, the recent rebound structure would be significantly weakened, potentially leading to tests of $61 or even $60.

On the 4-hour chart, silver maintains a clear uptrend with a series of higher lows, having reclaimed the upper boundary of its recent consolidation range while short-term moving averages begin to turn upward. The $67 level forms the immediate resistance zone; a decisive 4-hour close above it could fuel further gains toward $68.00 and $70.00. However, if prices surge and then fall back below $65, the short-term rally may enter a consolidation phase.

Overall, silver is at a critical confirmation stage following its rapid rebound. The $67 level is the key gauge for whether the uptrend can continue, while the $62.80-$63.00 zone represents the most important support area on any pullback.

Summary

The retreat in oil prices has alleviated inflation concerns, and the US 10-year Treasury yield has eased from around 5% to approximately 4.93%, creating a favorable short-term macro backdrop for silver's rebound. The metal has risen for a second consecutive session, approaching the $67 threshold. However, the Fed's 25-basis-point rate hike this week, coupled with persistent hawkish rhetoric, has lifted market expectations for another move in October to roughly 53.1%. Silver thus remains caught between rate pressure and support from falling yields.

In the near term, the focus is on whether silver can decisively break above $67. If oil continues to decline and the dollar alongside Treasury yields weaken in tandem, the rebound could extend toward $68 or even $70. Conversely, if US yields push back above 5% and drive the dollar higher, silver may revisit support near $63.